Analyst/Investors, please contact:
Barry Zwarenstein, Iomega Corporation, (858) 314-7190

For Immediate Release

IOMEGA REPORTS SECOND QUARTER 2003 RESULTS, OUTLINES PLAN TO RESTRUCTURE AND ANNOUNCES ONE-TIME CASH DIVIDEND OF $5 PER SHARE

SAN DIEGO, July 17, 2003 ­ Iomega Corporation (NYSE: IOM) today reported net income of $4.4 million, or $0.09 per diluted share, for the quarter ended June 29, 2003. Net income for the quarter was favorably impacted by the recording of $4.6 million of research tax credits. In comparison, second quarter 2002 net income was $11.5 million, or $0.22 per diluted share, which included a pre-tax $2.2 million reversal of restructuring charges as well as a $0.7 million decrease in the Company’s valuation allowance for net deferred tax assets.

Second quarter 2003 sales of $100.8 million decreased $44.4 million, or 30.6%, compared to second quarter 2002, due primarily to declining Zip product sales. The second quarter 2003 gross margin percentage was 34.1%, compared with 37.8% for the second quarter of the prior year. The decrease in the gross margin percentage was primarily due to a lower proportion of sales of higher margin Zip products. Operating expenses of $35.7 million decreased $2.8 million compared to $38.5 million during the same period in 2002 (2002 included a $2.2 million reversal of restructuring charges), but increased as a percentage of sales due to lower sales levels. During second quarter 2003, the Company had an operating loss of $1.4 million compared to operating income of $16.4 million in the prior year.

“I am pleased to announce that during the quarter we made significant progress on the development of our Digital Capture Technology (DCT) and Removable Rigid Disk (RRD) new product technologies, with the delivery of working prototypes to OEMs in the U.S. and Asia for evaluation in a variety of applications,” said Werner Heid, president and CEO, Iomega Corporation. “The initial response from potential customers has been encouraging. However, new annuity revenue streams from DCT and RRD, assuming we achieve our goals regarding successful completion of development, product launches and eventual market acceptance, are not expected until second quarter 2004. In the meantime, the continuing decline in the high margin core Zip business, combined with the substantial investments required for the new product technologies and our emerging Network Storage Systems (NSS) business, resulted in an operating loss for the second quarter. These adverse business trends on the Zip product line are expected to continue as is the need to invest additional funds to develop DCT and RRD and to expand our NSS business. Therefore, we have made the difficult business decision to restructure our operations to align our expenses with expected revenue levels with the goal to return the Company to operating profitability, while addressing current market opportunities and continuing to finance our future. The expected lower operating expenses will not be fully implemented until first quarter 2004, which makes it very unlikely that the Company will be able to achieve an operating profit before restructuring charges in third quarter 2003.”

The restructuring charges, expected to range between $20 million to $25 million, are anticipated to be recorded in the second half of 2003, with the majority being recorded in the third quarter. These charges will reflect expenses associated with the reduction in the Company’s worldwide workforce of approximately 200 employees; reimbursement of restructuring expenses incurred by strategic suppliers; lease expenses associated with unutilized facilities; termination of contractual obligations; asset write-downs and other miscellaneous charges. Substantially all of these charges are expected to be cash charges. The Company anticipates these actions will result in annual cost and expense reductions of approximately $35 million to $40 million as compared to first half 2003 run rates, when fully implemented in the first quarter of 2004.

The Company also announced that its Board of Directors declared a one-time cash dividend of $5.00 per share, to shareholders of record as of the close of business on September 15, 2003, to be paid on October 1, 2003. Based on the number of common shares outstanding as of June 29, 2003, the total amount of the dividend will be approximately $257 million. Shareholders are encouraged to consult with their own tax and financial advisors regarding the implications of this dividend on their individual circumstances.

“The Board of Directors, working closely with management, has for some time been actively exploring ways to improve shareholders’ return on the Company’s excess cash,” said David J. Dunn, Chairman of the Board. “We have looked at a myriad of opportunities, inside and outside the storage industry, domestically and internationally. While there have been a number of interesting opportunities, there have been none which met our twin goals of attractive returns and safety for shareholders. Considering this, and the recently reduced tax rate on dividends, the Board has decided to distribute the cash which it believes is not needed to run the business to shareholders. This dividend will provide the Company’s shareholders with a substantial cash amount from their investment in the Company, while at the same time allowing them to maintain the potential benefits of shareholder ownership in a company that has many strong assets, including a strong management team, well known brand and valuable intellectual property. The Board has confidence in management's capabilities and in their dedication to do everything in their power to re-establish Iomega as a growth company and we believe they have the resources post-dividend to accomplish that goal.”

As required by the Company’s 1997 Stock Incentive Plan, an adjustment to reflect the dividend will be made to the approximately 1.9 million stock options outstanding under this plan. The outstanding options will be adjusted by reducing their exercise prices by an amount equal to the dividend (but in no event below $0.03 1/3 per share), effective as of the ex-dividend date. The Board of Directors also intends to recommend to the Company’s shareholders that they vote, at the 2004 Annual Meeting of Shareholders, to approve amendments to the Company’s 1995 Director Stock Option Plan, 1987 Stock Option Plan and 1987 Director Option Plan permitting a similar adjustment to be made to options outstanding under those plans. Unless such shareholder approval is obtained, no adjustment will be made to the options outstanding under those three plans.

Second quarter 2003 Zip product sales of $66.4 million decreased $47.8 million, or 41.9%, from second quarter 2002. Iomega’s second quarter 2003 Zip drive shipments were 0.6 million units, a decrease of 0.4 million units when compared to second quarter 2002. Second quarter 2003 Zip disk shipments were 3.3 million units, a decrease of 2.9 million units when compared to second quarter 2002. Second quarter 2003 Zip drive unit shipments to OEM customers of 0.3 million units decreased 0.2 million units from second quarter 2002 and represented 56% of total unit shipments in second quarter 2003 compared with 57% in second quarter 2002. The second quarter 2003 Zip product gross margin percentage of 45.9% increased slightly from 45.0% in the same period a year ago. Lower sales and gross margin dollars resulted in a second quarter 2003 Zip product profit margin (PPM) of $26.6 million compared to $40.5 million in 2002.

Second quarter 2003 Optical (CD-RW and DVD-RW) product sales of $18.9 million decreased $1.4 million from second quarter 2002 as the market for aftermarket, external CD-RW drives has declined. However, the expected decline in CD-RW revenue was partially offset by the successful introduction of our DVD-RW products. The second quarter 2003 Optical PPM was $1.5 million, compared to a product loss of $1.1 million in the prior year.

Other mobile and desktop storage product sales in second quarter 2003 were $11.4 million, a 62.4% increase compared to $7.0 million in second quarter 2002. Sales from external hard disk drive products totaled $7.4 million, compared with $6.4 million in second quarter 2002. Sales from Iomega Mini USB drives, introduced in the fourth quarter of 2002, reached $3.6 million, increasing 34% sequentially. PPM for other mobile and desktop storage products for the second quarter was $0.7 million compared to a product loss of $1.7 million in second quarter 2002.

Second quarter 2003 product sales from the discontinued Jaz® product line were $1.0 million, a decrease of $2.2 million from second quarter 2002. Jaz PPM in second quarter 2003 was $0.1 million compared to $1.0 million in second quarter 2002.

Second quarter 2003 NAS product sales of $3.1 million increased by $2.6 million compared to $0.5 million in second quarter 2002. The NAS product loss in second quarter 2003 was $4.2 million due to continued research and development and sales and marketing spending designed to broaden and refresh the product offering during second quarter 2003, other costs associated with the product refresh and under-absorbed operational overhead. This compared to a product loss of $0.9 million in second quarter 2002.

During second quarter 2003, the expenses incurred in connection with the new product technologies under development, DCT and RRD, were $6.1 million. The Company also capitalized an additional $0.5 million during the quarter, primarily for supplier tooling and manufacturing equipment. During the second half of 2003, the Company expects to incur a further $12 million to $15 million in expenses, and invest a further $8 million to $9 million in supplier tooling and manufacturing equipment, relating to DCT and RRD.

The Company’s total cash, cash equivalents, and temporary investments decreased by $8.4 million to $452.2 million during second quarter 2003.

Please refer to the attached supplemental information schedule for unit information by product line and revenue by region.

Conference Call Information
As previously announced, Iomega will host a conference call with simultaneous audio webcast beginning at 4:30 p.m. Eastern Time today to discuss Iomega’s second quarter results and the other items announced today. The webcast may be accessed at http://www.iomega.com and will be available for replay through the close of business on Thursday, July 31, 2003.

About Iomega
Iomega Corporation provides easy-to-use, high value storage solutions to help people protect, secure, capture and share their digital information. Iomega’s award-winning storage products include the popular Zip® 100MB, 250MB and 750MB drives, high-performance Iomega HDD Portable Hard Drives Iomega HDD Desktop Hard Drives, the Iomega Mini USB Drive, Iomega external CD-RW drives, Iomega® DVD drives and the Iomega Floppy USB-Powered Drive. Iomega simplifies data protection and sharing at home and in the workplace with Iomega® Automatic Backup software, Iomega Sync software, HotBurn® CD-recording software, and Active Disk™ technology. For networks, Iomega NAS servers offer capacities of 160GB to 1.4TB. For unlimited capacity and anytime, anywhere access, Iomega offers iStorage™, the secure online storage choice. Iomega also offers businesses and consumers a comprehensive data recovery services solution for recovering lost data due to hardware failure, file corruption or media damage. The Company can be reached at 1-888-4-IOMEGA (888-446-6342), or on the Web at www.iomega.com.

NOTE: The statements contained in this release regarding development, production and distribution of the Iomega products, anticipated product pricing and availability, expected product performance and specifications, future applications for the new products and all other statements that are not purely historical, are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward looking statements are based upon information available to Iomega as of the date hereof, and Iomega disclaims any intention or obligation to update any such forward looking statements. Actual results could differ materially from current expectations. Factors that could cause or contribute to such differences include, but are not limited to, the successful completion of product development and testing, market acceptance of, and demand for, the Iomega product, any difficulties encountered in ramping up production or other manufacturing issues, including component availability and pricing, co-development, production, and distribution issues, product pricing and conformity to specifications, dependence upon third party suppliers, competition, intellectual property rights and other risks and uncertainties identified in the reports filed from time to time by Iomega with the U.S. Securities and Exchange Commission, including Iomega's Annual Report on Form 10 K for the year ended December 31, 2002, and its most recent Quarterly Report on Form 10-Q.

# # #

Copyright© 2003 Iomega Corporation. All rights reserved. Iomega, Zip, Active Disk, iStorage and HotBurn are either registered trademarks or trademarks of Iomega Corporation in the United States and/or other countries. Sonic, MyDVD and CinePlayer are either registered trademarks or trademarks of Sonic Solutions. Adobe and ActiveShare are registered trademarks of Adobe Systems Incorporated in the United States and/or other countries. Certain other product names, brand names and company names may be trademarks or designations of their respective owners.